Challenger Energy Spuds Saffron-2 Well Onshore Trinidad

Source: 5/26/2021, Location: South America

Commencement of the Drilling of Saffron-2 Well

· Drilling of the Saffron-2 appraisal well in Trinidad and Tobago has commenced as scheduled

· The Saffron-2 well has two primary objectives:

o To provide immediate production and cash flow

§ A successful Saffron-2 could produce between 200 to 300 bopd, resulting in US$1.8 - US$2.6 million p.a. of net cash flow to the company

o To inform the most efficient way to develop the Saffron field

§ Internal estimates are that in a success case the Saffron field is capable of producing 1,000 - 1,500 bopd by end 2021, providing a cash flow run rate of US$8 - US$12 million p.a.

§ A full field development could achieve peak production rates of up to 4,000 bopd and yield cash flow in excess of US$25 million p.a.

· The Saffron-2 appraisal well is a follow up to the successful Saffron-1 exploration well drilled in March 2020 that resulted in discoveries in both the Middle Cruse and Lower Cruse reservoirs. Significant lessons were learnt during the drilling of Saffron-1 to inform the drill plan for Saffron-2

· Saffron-2 is a low cost onshore well with a budget, inclusive of production completion, of approximately US$3 million, and expected to take between 25 and30 days to complete

Eytan Uliel, Chief Executive Officer designate, commented:

"Following completion of mandatory inspection and reporting processes in Trinidad, we can now advise that drilling of the Saffron-2 appraisal well has commenced, with the well having spud on 24 May (UK time, late 23 May local time). The well will be drilled over the next 25-30 days, to a total depth of approximately 4,500 feet.

The objectives of the Saffron-2 well are twofold. Firstly, to produce oil and generate cashflow in its own right, with a P50 projected production rate of 200-300 bopd and, more importantly, to inform the appropriate development plan for the Saffron field as a whole. Based on the Saffron-1 well discovery and subsequent studies, we believe Saffron is a field capable of growing to production in the range of 1,000 - 1,500 bopd by the end of 2021, and which could ultimately achieve production rates of up to 4,000 bopd in a full field development scenario.

This is an exciting start for Challenger Energy Group, as we take the first step in our longer-term strategy of developing our existing portfolio to increase the Company's production and cash flow. I look forward to updating shareholders with results once the well has been completed."

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